Lending to sister in USA

B

Brutus

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My sister in the USA wishes to borrow 200,000 dollars from me. I live in Ireland. We intend drawing up a formal contract. Is anybody aware of tax or other implications for me? The term will be for around 5 years with monthly repayments.
 
Thanks for that. Exchange rate is of course crucial given what has been going on.She said she would pay a higher rate than the best I am getting at the moment. This is 5.1%. So I guess 5.2% would be ok. This would be on a monthly basis of €1000-1500. After five years she hopes to be able to pay me the balance.
 
I would not bank on 0.1% on the rate to necessarily offset the risks of currency fluctuations if that's what you mean.
 
If you lend her €200K then you need to make sure that you get €200K back regardless of what this is in US$ over that period. That is my main point. The rate charged is a separate issue. You might want to make sure that it at least keeps pace with inflation and/or that it is comparable to market rates on offer on deposits.
 
Unless you are loaded, consider why your sister wants to borrow this from you, rather than from a bank. If she's a credit risk, well maybe you'll never see your money back. If you can afford this, fine. If not, think again.

Lending to friends and family is a risky business.
 
Good point. Price risk accordingly. In my personal opinion (and having been there, done that) lending to family or friends is probably not a great idea in many (most?) cases. There are too many problems that can arise. Refusing to lend may cause its own problems but these may well be minor in comparison.
 
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